Brexit Blockbuster Shocks World Markets! Here’s What to Do …

(Because of the market turmoil caused by the Brexit vote, Mike Larson is sending out his Afternoon Edition at this special time.)

Market Roundup

Dow

17,400.00 (-611.07)

S&P

2,037.30 (-76.02)

NASDAQ

4,707.98 (-202.06)

10-YR Yield

1.58% (-0.16)

Gold

$1,318.80 (+$57.20)

Oil

$47.60 (-$2.51)

In a shock felt ’round the world, U.K. voters chose “Brexit.”

They didn’t listen to the elites, the bankers, the academics, and others pushing to maintain the status quo. They didn’t heed the warnings of European Union officials in Brussels, central bankers here and abroad, or heads-of-state around the Continent. Instead, they chose to lay the groundwork for stepping out of the European Union – for better or for worse.

The 52%-to-48% margin of victory … and the turnout of more than 72% … showed just how powerful the “Leave” movement turned out to be. That immediately raised concerns that other nationalist, anti-immigration, anti-bureaucracy movements in countries like France, Italy, Austria and Germany will gain steam, and potentially push for their own referendums.

As a result, the vote results swept like a hurricane through bonds, stocks, currencies, and commodities from Tokyo to Frankfurt to London to New York …

Our Dow futures plunged almost 700 points, while the S&P 500 futures tanked by more than 100. Interest rates plunged, with the yield on the 10-year Treasury Note hitting its lowest since 2012. Long bond futures soared more than six points in price.

Gold prices soared more than $85 an ounce, hitting a 27-month high. Silver surged to almost $18.40 an ounce, bringing its year-to-date gains to 33.3%.

The British pound crashed by more than 11% overnight, the biggest one-day drop in the modern currency era. The plunge left the pound at its weakest level against the dollar since 1985. The Japanese yen – my favorite “crisis currency” – soared to as high as 100 yen against the dollar.

U.K. Prime Minister David Cameron fell on his sword, announcing he would resign in the next three months.

All of those moves moderated somewhat as European and U.S. traders took over and politicians and central bankers pledged to help soothe markets if necessary. The Bank of England in particular said it was “monitoring developments closely,” and pledged to provide the financial system with as much as $345 billion in liquidity to help it ride out the turmoil. The Swiss National Bank also intervened to prevent the franc from soaring as a safe-haven currency.

“Let’s be honest. What more can central bankers really do at this point?”

But let’s be honest. What more can central bankers really do at this point? Since Lehman Brothers went under, they’ve already printed more than $12.3 trillion and cut interest rates more than 650 times around the world. Yet they haven’t succeeded in spurring underlying healthy growth and inflation, and their efforts to juice the markets artificially are having less and less impact.

There’s a very simple reason for that, and it is one I have continually tried to drive home since last summer: The credit cycle has turned! The economic cycle has turned. The “unseen hand” that was working FOR the markets from 2009 through mid-2015 is now working AGAINST them.

When you layer massive political uncertainty on top of those powerful, negative forces, it should come as absolutely no surprise that the “Everything Bubble” is deflating.

The good news? If you’ve been following my advice over the past several months, you should be well-positioned to ride out this powerful market storm. I recommended lightening up dramatically on stocks before last summer’s crash, and suggested you only stick with “Safe Yielders” that have high Weiss Ratings and low economic sensitivity.

I also recommended positions in gold, bonds and currencies that are designed to make the most out of markets like these. That advice is paying off handsomely.

Want to go further? Turn the massive shift in the credit cycle into one of the potentially greatest profit opportunities ever? Well, that’s exactly what I’ve been doing in my All Weather Trader service over the past several months.

My subscribers had the chance to rack up gains of as much as 122%, 140%, 203%, even 269.7% last fall and earlier this year when market turmoil erupted. Now, with Brexit passing … central banks out of bullets … and markets slowly recognizing the problems I’ve been warning about for several months, I believe we could do even better. Just click here to review my e-book on these topics, and to get started with my recommendations.

Until next time,

Mike Larson

Recommended Articles by Mike Larson:

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.

{62 comments }

WiseguyFriday, June 24, 2016 at 11:30 am

Even though everything is seemingly turning down into deflation, the US stock market will soar since it is the best investment in the world now. In all the uncertainty, the US is relatively certain. These are panic reactions we’ve seen today. And although it’s not necessarily over, it’s definitely overhyped!

Adam Lyden KasibuFriday, June 24, 2016 at 11:40 am

People must think positive and waiting on better outcome it’s better.

bill lFriday, June 24, 2016 at 11:43 am

IT’S obvious that Brussells and London were out of touch with the citizens and Englands sovereignity, The same that is happening with our states and the American public. Wrong solutions for the wrong reasons and no improvement.

DunkelmannSaturday, June 25, 2016 at 5:25 pm

England has no sovereignty. It is the UK that is the sovereign nation. England is only part of the UK.

MikeFriday, June 24, 2016 at 11:57 am

Everything bubble is not deflating . Housing is still inflating ..

JDWFriday, June 24, 2016 at 12:06 pm

I am very happy to see the Brits have regained their common sense and national pride. It is true we all need each other state, but we need to be independent and sovereign. The Brits have a long history of being a world power and not a lackey for a self serving EU that dictates what they want. I wish the Brits well and as an American I hope they do well. After all, we have roots and common alliance with them. I am proud of the Brits

RichardFriday, June 24, 2016 at 6:30 pm

Please do not forget that 48% of the population do not share your views. 65% of the “under35 age group voted against Brexit. They are going to be faced with all the consequences of this hiatus, not the elderly who voted massively for Brexit

drinkyMonday, June 27, 2016 at 10:37 am

One vote is all that is needed to be called a majority Please get behind the people and stop crying over spilled milk join the majority of the people and help it work

SteveMonday, June 27, 2016 at 5:40 pm

No kidding. For better or for worse the UK needs everyone’s support.
I’m getting tired of the losers trying to impose their own way – even after a majority says NO, we are going to get this different approach.
Keep on being devisive and see where you end up.

huanjoMonday, June 27, 2016 at 10:19 pm

Irrelevant. Everyone has an equal vote regardless of age.

EugeneFriday, June 24, 2016 at 12:26 pm

Interesting this is and some what scary to me. Now age 86 and savings way down so not able to invest . My question is have never see or hear about Insurance news on Annuities (or investments by them) which I have left. Keep hearing stocks crashing but nothing about Insura. company’s in trouble? Have Bankers Life.
Need I to worry? Thanks.

John HSaturday, June 25, 2016 at 6:22 pm

Should you worry? Well that depends on what you mean. If you had made the mistake of putting your investment money into insurance products or annuities – they YES, you’ve made a big mistake. I don’t know of that means you should worry about it or not – but the reason Weiss Research does not spend much time with these products is that they are not worthy of your investment dollars. Insurance (and were are only talking “whole life insurance” products, here are a hybrid combination of insurance and investment) never pay you what you should be earning on your money. You just let the insurance company pocket profits that should be yours.

The same is true of annuities. It’s like giving someone your money, letting them invest it and earn 8% return (say) and they give you half of that back later on. What sort of deal is that? I recommend investing the money yourself and keeping all of the returns and giving the annuity company nothing. To me – that’s much better.

When it comes to life insurance, you first need to determine if you actually need it or not. A lot of people don’t actually need life insurance – but they buy it anyway because they haven’t thought about WHY they need it. And if you do need it buy it as term life insurance. Term life insurance is by far the most straightforward and least expensive type of life insurance. You only pay for the coverage you need – and that’s all.

But most importantly – do not believe that insurance is an investment product – it is not. Unscrupulous financial advisors like to sell you on insurance as the first step of a “financial plan” (they say – “…protect the base”) because they make big commissions on the sales of insurance, but very little on the sales of other investment products. It’s good for them to sell it, not for you to buy it.

In your particular case – Eugene – you probably need to speak to someone about the best use of your remaining funds. Nobody can tell you what to do here on the blog. As for Bankers Life – I would check to see if there is a rating on them. Weiss used to have ratings of banks and insurance companies – call them and ask if they still have that and what they advise you to do to check the solvency of Bankers Life.

David L. Raskin, CLU, ChFCTuesday, June 28, 2016 at 2:42 pm

I’ve heard that erroneous advice for 55 years. That’s how long I’ve been in the insurance insurance and investment industries. I am a Charted Life Underwriter, Chartered Financial Consultant, and have a Series 1 Equities License. People who promulgate those suggestions are never around when the person who accepts the advice reaches retirement age. I am and invariably find that ‘buying term and investing the difference’ doesn’t work. Of course the sage that provided the advice is no where to be found. I have an annuity that is paying 6% interest or the S&P return, whichever is higher. Not bad. But, for younger people, sorry Eugene, there is a product used and designed for GE that provides tax deferred growth, and, if handled properly, tax free income or withdrawals at any time. Like a giant Roth IRA but with no limits of contribution or withdrawal. And oh, it’s a form of whole life insurance. Check the annual reports of most of the largest banks. They own billions of dollars of this. The acronym is usually COLI and it’s shown as an asset on the balance sheet. The banks seem to be very fond of these contracts, but what do they and their finance departments know. However, John’s right about one thing; you need professional advice. The advisor should have professional degrees and experience. Commission salespeople make the economy hum. Everyone gets paid for doing something. I don’t know anyone who works for nothing, You can get Bankers Life ratings via Google. Good luck.

JamesFriday, June 24, 2016 at 12:31 pm

Great article. Mike Larson! Our US Bankers and inept Politicians just hada Major Wake Up News Flash! Best Regards, James

Herbert grosingerFriday, June 24, 2016 at 12:33 pm

What is the cost? Never min, how much I am saving!

JayBeeFriday, June 24, 2016 at 12:51 pm

Markets are crashing around the world, deflation is picking up momentum, yet gold and silver are soaring. That doesn’t make any sense to me. If so many people are going to lose most of their money in the markets, how will they have any cash left to buy precious metals?

GordonFriday, June 24, 2016 at 12:59 pm

Yes I listened to Mark Carney say that they were “WELL prepared for this” and would keep the money market liquid. Translation. We will keep the printing presses going 24/7 regardless back your wheelbarrows up to the back door.

VictoriaFriday, June 24, 2016 at 6:24 pm

Gordon, I agree! Plunge Protection Teams, also, around the world, had their work cut out for them today!!

I can only imagine how much the markets would’ve gone down without them!!!

Mary DiepholzFriday, June 24, 2016 at 1:03 pm

When the power of love overcomes the love of power then and only then will there be peace.

“it is far easier to get a camel through the eye of a needle then a rich man into Heaven”.
It’s in the GOOD BOOK. GOD HELP AMERICA.

davidFriday, June 24, 2016 at 3:12 pm

Oh, c’mon. A poor man can’t get through the needle, either !! Your god helps those who help themselves. It’s in the book!

JohnFriday, June 24, 2016 at 9:34 pm

There is a narrow pass in the Middle East called eye of the needle. A camel would have to unload its packs to get thur this pass. I think this is what is being talked about in this verse in the bible comparing a rich man getting to heaven as hard as getting a camel thur the eye of the needle.

RickFriday, June 24, 2016 at 11:08 pm

Wrong, it’s not in the “Book”. Try and find it.

FranFriday, June 24, 2016 at 9:53 pm

This is not a discussion on war and peace!

ivanoFriday, June 24, 2016 at 1:11 pm

My in box is chock full of messages from financial NEWS letters on how the world would have crashed if England voted to leave….. Well, I am waiting! I am really surprised that the British man/woman on the street voted to leave the European Union. I believe in the long run this will not harm Britain. Also, they might be able to absorb the millions of unwanted immigrants that have refused to adopt local culture. Take a deep breath people and stock up on quality securities that that dropped in price.

NellaFriday, June 24, 2016 at 2:10 pm

No way re: unwanted immigrants. One of the reasons Brexit passed was that the British people want more control over immigration than was provided to them under the EU.

SteveHFriday, June 24, 2016 at 2:49 pm

Mr Cameron stated many times that if the Brits voted for Brexit that would be the start of World War 3.

Haven’t seen any tanks rolling by?

Could Mr Cameron have been lying?
Surely not?

DunkelmannSaturday, June 25, 2016 at 5:29 pm

As The vote was by the whole of the UK. England is only part of the UK. It couldn’t leave on its own since it is not a sovereign country.

WatcherFriday, June 24, 2016 at 1:13 pm

An old Wartime Aviator friend of mine in moments of economic stress used to advocate what he called “Masterly Inactivity.” In those days being 15 or so years younger I tended to react very quickly to economic changes, aviation emergencies were a different thing altogether and needed a swift reaction, Over the years he invariably proved correct. Stepping back and taking no immediate action is generally the best thing. Remember the old “Stop the World. I want to get off” ? Well waiting awhile and stepping back on, – the game board pieces have all been moved. whilst you are away and new opportunities and solutions will have arisen in your absence. With the so called ‘Brexit’ panic that is the thing to do. Nest week everyone will have adapted to the situation and very little will have changed.

SteveHFriday, June 24, 2016 at 1:28 pm

Mike,

You’ve been listening to Cameron–that’s really, really bad.

The facts are that Britain was given the choice of Leaving the EU, or staying in an EU where the Lisbon Treaty lays out various ways “towards ever closer union” .
Amongst this “ever closer union” was included an EU Army, Britain joining the Eurozone and unlimited and uncontrolled immigration.

Let us take the analogy of the US being ruled by unelected bureaucrats living in Venezuela insisting on unlimited and uncontrolled immigration into the US, and an army subservient to the whims of the said bureaucrats in Venezuela.
How many Americans would want to continue this Union?

When your readers have answered that question you will understand that despite the threats, lies and bullying the majority of Brits did not wish to continue in the Union.

The FTSE 100 has hardly moved, only about 100 pts today, well within normal fluctuations.
–No drama, no blockbuster.

On the other hand, it has demonstrated certain weaknesses and incompetencies in other nation’s economies, but that is up to them to sort out.

SpenceFriday, June 24, 2016 at 2:04 pm

Cheers Steve, way to keep your head about you and see through the fog of politico blather

PattiFriday, June 24, 2016 at 3:19 pm

Congratulations UK for voting to be free. My son-in-law is British and he is cock-a-hoop over the results of the vote. Says it may be rocky for a bit but things will work out.

Michael CabreraFriday, June 24, 2016 at 1:33 pm

I have $200k to invest.
Please can you give me advice in where I can invest this money? I lost $80K in the stock market with The broker Raymond Jones and I don’t want to lose $80K again.

Michael

NellaFriday, June 24, 2016 at 2:13 pm

Get advice from three different financial advisers and then make up your mind. And don’t rush into anything without thinking it through.

Norman CanterFriday, June 24, 2016 at 5:31 pm

To Michael Cabrera……
Your $80,000 loss on the market indicates that you have not developed the technique of selling when a stock declines and knowing when to move independently from your broker….when to get out..that is.
You would be better off to simply put your $200,000 in the bank in savings or CDs. Sometimes it is better to not lose money, particularly in a period of great volatility and uncertainty. After all, many hedge funds have lost money this year. Furthermore, we may be in for a strong bear market at this time.
“Better safe than sorry”.

G HFriday, June 24, 2016 at 7:38 pm

Uh, would you by any chance be referring to EDWARD Jones??

FranFriday, June 24, 2016 at 9:57 pm

Watch out for scam artists Michael.

peterSaturday, June 25, 2016 at 5:33 am

do not use a broker they only make money on losing .

m2wTuesday, June 28, 2016 at 4:40 pm

Not true (they only make money on losing. They make money on every transaction or commissioned funds etc.

DanFriday, June 24, 2016 at 1:39 pm

You have talked alot about oil . If you are a savy investor and had insight to buy oil at such low discounted prices a person could make alot of money . Is that still a true statement . You haven’t talked about oil for a long time . Is oil still a stock to own ?

Kishin ManghnaniFriday, June 24, 2016 at 1:42 pm

Today’s equity markets’ slump (not currencies) has only wiped out the gains of the first days of the week in anticipation of “remain” vote. But the consequences and the repercussions have yet to be felt of the “leave” vote particularly in the equity markets.
Panic will follow when countries like Greece, Netherlands , Sweden will follow suit for a similar referendum. The public has realized that EU has done more harm than good to any
of the countries with Germany and Brussels ruling and dictating. The panic has yet to come!.

TiredFriday, June 24, 2016 at 1:47 pm

Maybe its time the so called leadership of the United States take note. People here are tired of not being heard. The middle class is squeezed more in the corner everyday. Printing money endlessly will not end well.

SharFriday, June 24, 2016 at 2:05 pm

I don’t think you should have included Germany as anti-immigration and anti-bureaucracy statement as they and Brussels have been running this whole show from their place of power and control the entire time. Germany is greedy and has been since the war. I honor England once again for standing up to oppression and claiming their independence and pray we will exhibit the same courage in November. At some point one must face the truth regardless of the fall out which is always worse the longer it simmers.

Dr.Donnie SmithFriday, June 24, 2016 at 2:44 pm

The bureaucrats, crony capitalists and politically connected bankers preferred expanding the E.U. into a One World Order where they would be able to steal even more money from the masses with less accountability. The Brexit will result in decentralization and economic liberty, which will result in a stronger economy not just for the elites but for the average British citizen. Sure it may take some time, just like coming out of any economic shock, but Britain will emerge economically stronger assuming they choose the path of free and fair markets and economic liberty. Better they go through the short-term pain now vs. long-term pain that is the economic debacle of the E.U.

drinkyFriday, June 24, 2016 at 2:06 pm

Michael Cabera
But your money in gold miners and gold coins and cash and pray that Hillery gos to jail

Mike, I got it spot on, I transferred £2000 to Australia a month ago got interbank rates.
Going on holiday.

James L StroblFriday, June 24, 2016 at 2:23 pm

ditto,Mary D. Pray it’s not too late to recover !

DdFriday, June 24, 2016 at 4:53 pm

Its obvious the emporers have no clothes. For weeks we’ve been hearing from financial gurus, central banks, and political elites how a brexit will be worst than the financial crisis. I don’t see anything of the sort. Even now the clowns at cnbc keep playing the video of one person saying she regrets choosing leave.

David Cameron is a disgrace. Throwing a tantrum like a child just because he didn’t get his way. You ran to be PM, do your damn job, would you quit if the market declined 3% for some other reason? Politicians are spineless weasels, if they can’t rob the taxpayer they won’t work!

James BarnesSaturday, June 25, 2016 at 4:13 pm

To Dd: It’s easy for you to shoot your mouth off. You are distantly removed from the real decision making. They are in public view. You hide behind a pseudonym. I think you do it because it makes you feel superior. Further, strong negative emotions distort reason. When I see that, I tend to discount the persons whole expression.

stevenFriday, June 24, 2016 at 5:48 pm

We know that the 10-Year and the Dow run in tandem. So the yield on the 10-Year note is almost one and a half. That is nothing more than a dogpile onto safety much in the same way an investor would hedge against losses. My outlook is for the pound to recover as London and The City recovers. I would caution jumping in early however as there is the definite likelihood of a pushback on the part of those whose vested interests suffered a loss as the result of the Brexit.
In the meantime, I will have a cup of English Tea, a Dutch chocolate cookie, a cheese Danish, and, oh yes, some Italian prosciutto with some Greek olives on the side. I will be paying for all of this with my American express card.

JimFriday, June 24, 2016 at 7:26 pm

Theodore Roosevelt: ” if you intend to anger a Conservative, lie to him. If you intend to anger a Liberal, tell him the truth.” Jim

Glen MilleyFriday, June 24, 2016 at 9:11 pm

I am delighted that the elites didn’t get what they want. Their goal is certainly one world government and this is a step in reverse, despite their carefully controlled media push. When we get rid of the NAFTA and other trade agreements we will get back the country we used to be. These agreements were for the purpose of sending our jobs offshore to pay workers peanuts and then sell the goods back into North America without any tariffs or duties. IT has begun and will continue to bring the US to its knees, which is what they want. Now there are tens of thousands of millionaires in Hong Kong and China and other countries and they are buying up North America with what should have been our money. What the Elites want is always opposed to what the average worker wants, and they use their ownership of most of the media to carefully push the population in their direction.

JeanFriday, June 24, 2016 at 11:02 pm

Today’s Brexit vote restored my faith in humanity. Britain took a stand and rose up against the Globalist dictatorship. My hope is that many other countries follow their lead. The markets are inconsequential in this regard, they will collapse sooner or later anyway and should. Change is never easy, doing the right thing is never easy, because freedom must be earned. Otherwise, slavery is the only alternative.

HowardSaturday, June 25, 2016 at 5:08 am

Hi Mike
The people didn’t listen to the threats from the remain campaign because ruling politicians and the bureaucracies have not responded to declining middle class wealth, lousy interest rates, stupid decisions on border security among others. People are sick of privleged classes telling them what to do. It is not a national issue, it is a global issue. Uncertainty will prevail until the lies and useless politicians are dumped in favour of reform. While gay marriage and other progressive issues stand in front of other fundamental economic reforms, then we will continue to have instability.

RobertSaturday, June 25, 2016 at 8:44 am

There will be pain in Britain, but had they “remained” they would still have had the pain, just slower and over a longer period of time. The big difference is that with the slow way, they would have eventually become so dysfunctional that they’d never gain their independence. We in America will have a similar choice this November. We can either continue with the Obama/Clinton decline or opt for something else. Will it be better? Can’t get much worse once we recover from the seeds of dysfunction planted by our conventional politicians who buy votes with public funds.

John HSaturday, June 25, 2016 at 6:29 pm

Robert – When you say “we will have a similar choice” in our upcoming elections, do you mean we’re voting on whether or not to remain in the EU? (because if we are not – it’s not similar)

Robert FSunday, June 26, 2016 at 10:53 pm

A vote for Clinton IS a vote for the status quo, which is in favor of the EU & globalization, further loss of national sovereignty for all with continued growth of world wide communism. This has been our path for decades now.

ElSaturday, June 25, 2016 at 3:16 pm

Wish I started reading MM earlier.

metal manMonday, June 27, 2016 at 11:50 am

I have been waiting for you to say buy on precious metals and they keep going up. Should I still wait? or did I miss the bottom?

Metal man

Henry PopeTuesday, June 28, 2016 at 9:52 am

Interesting comments from a variety of individuals and wisdom from experience.
Bible quotes, insurance questions, patience before reacting, and the political implications of our upcoming elections.
Along with all this I might add each person should pray for wisdom and patience.
The USA needs to listen to the voters not satisfied with the status quo that has given us today’s problems.

AlanTuesday, June 28, 2016 at 10:17 am

Nothing has changed.
Those who are willing to trade freedom, for what appears to be security, deserve neither.